Prosthetics firm's stock plunges as it denies short-seller's Russia 'propaganda' allegations

• Grizzly alleges Ottobock's owner took a €1.1 billion payment-in-kind loan in 2024 to buy back 20% from EQT before the IPO, which could balloon to €2.36 billion by 2030, creating unsustainable debt for minority shareholders
• The hedge fund estimates over 30% of Ottobock's net income comes from Russia, far exceeding the 8.8% of revenue reported in the company's IPO prospectus for H1 2025
• Grizzly claims Ottobock's prosthetics appear in Russian propaganda channels for veteran care and may be servicing the Russian military, risking legal and regulatory penalties despite company denials

Summary: Ottobock Stock Plunges on Short-Seller Allegations

Key Development:

German prosthetics manufacturer Ottobock saw its stock plunge over 11% on Tuesday after U.S. hedge fund Grizzly Research released a report announcing a short position and making serious allegations against the company and its majority owner.

Main Allegations:

• Grizzly Research claims Ottobock's majority owner has extracted more money from the company than it earned over at least 15 years, citing media reports of €600 million in payments against only €340 million in earnings from 2010-2022
• The hedge fund alleges the owner took a €1.1 billion payment-in-kind (PIK) loan in March 2024 to buy back 20% of the company from Swedish private equity firm EQT before its IPO, with total debt potentially reaching €2.36 billion by 2030
• Grizzly estimates over 30% of Ottobock's net income comes from Russian business, significantly higher than official figures showing 8.8% of revenue from Russia in H1 2025
• The report claims Ottobock's prosthetics appear in Russian propaganda channels for veteran care, suggesting potential military applications

Company Response:

Ottobock categorically rejected all allegations and conclusions in the report, stating it would provide detailed responses after its annual general meeting.

Financial Context:

• Ottobock IPO'd on the Frankfurt Stock Exchange in October 2025 at a €3.8 billion ($4.42 billion) equity valuation
• The stock has fallen over 20% since going public
• The majority owner retains 81% control

Market Implications:

The allegations raise concerns about corporate governance, financial sustainability, and potential regulatory/legal risks related to Russian business operations.